8.3 Import Documentation, Restricted Goods & AD Due Diligence

The document set an AD actually holds

Chapter 13 never publishes a single “four-document” checklist headed packing list, but the Manual, the LC rules, Customs practice, and IPO condition columns converge on the same commercial set. Treat the following as the typical file, then add whatever Appendix-B or LC clause the live transaction requires.

Commercial invoice. This is the value spine. Para 7 wants full description and prices on the proforma/order/indent before the AD even enters the transaction. Para 10 wants the LC to specify invoices certifying the country of origin (crude oil and petroleum products imported by refineries or marketing companies may certify country of blending if bona fides hold). Para 13 allows remittance above the LC/registered-contract amount for quantity excess only if the unit price does not increase, the importer accepts, the commercial invoice shows the increased quantity, and the AD later verifies that quantity on the GD. An invoice that quietly raises unit price is not a para 13 excess; it is a new bargain and a TBML price-check event.

Transport document. Para 10: LCs must provide for payment against a full set of clean on-board (shipped) bills of lading, air waybill, railway receipts, or post-parcel receipts showing dispatch to a place in Pakistan. Sea-way bills are not permitted. Crude oil and petroleum products may, exceptionally, be paid against a copy bill of lading plus the exporter's letter of indemnity, but the AD must still see the other required documents and confirm the shipping company released the goods. Land-route Afghanistan cases (FE Circular 02 of 2017) relax bank routing of shipping documents; they do not relax the need to verify GD value before remitting. Para 12 restricts LCs that call for barge, country craft, motor launch, or truck to public-sector agencies or reputable private firms, or to private importers who either obtain a foreign-bank guarantee or wait to pay until Customs have cleared.

Packing list. Customs GD processing and any quantity check against the invoice depend on marks, numbers, and package counts. ADs examining LC documents under UCP 600/ISBP (Chapter 3 of this guide) will also see packing lists whenever the LC calls for them, which commercial LCs almost always do. Absence of a packing list is not an FE Manual silence that the goods may be unidentified; it is a credit-file defect and a TBML “what was actually shipped?” problem.

Certificate of origin / origin on the invoice. Para 10's invoice certification of country of origin is the FE minimum on LCs. The live IPO or an LC clause may additionally demand a certificate of origin, a GSP/FTA origin form, or a PSQCA/DRAP/CITES paper. Origin is also how para 2's Israel/notified-country prohibition and para 15's UN-sanctions screen are operationalised: a third-country bill of lading does not cleanse Israeli origin.

Other papers the mode creates. Registered contracts produce Appendix V-27. Advances produce Appendix V-31 plus the V-27A/V-27B reporting chain (Section 8.2). Freight-to-collect private imports produce Appendix V-29 before the carrier may accept rupee freight (para 24). Public-sector FX-allocation imports produce Appendix V-28 clearance from FEOD (para 19). “Payment not involved from Pakistan” cases need a commercial invoice that says payment is not required, transport documents, an importer undertaking, and Customs papers, with enhanced due diligence (para 6B(xiii)).

IPO as a mechanism — do not fabricate a 2026 banned list

The current principal Order is the Import Policy Order, 2022, S.R.O. 545(I)/2022 dated 22 April 2022, as amended by later Ministry of Commerce S.R.O.s (the Ministry's SRO page is the live source; consolidation reprints such as “Version-11” exist but still age). This study chapter does not print Appendix-A as a 2026 banned catalogue. Appendices move. The exam tests whether the AD knows which appendix does what and that the AD must open the Order then in force.

• Appendix-A (para 5(1) of the IPO): banned / negative list. Import of listed commodities is banned, subject to narrow statutory carve-outs (for example Federal Government defence imports, certain diplomatic-mission imports, and specified government-agency own-use orders placed by authorised administrative secretaries). IPO para 20 is brutal on commercial-quantity Appendix-A goods: they shall not be released in any circumstances and shall be re-exported at the importer's or shipping line's cost. There is no “pay a surcharge and home-consume” path for those commercial consignments.
• Appendix-B (IPO para 6(1)): restricted. Importable only on the conditions in the Order (often a named ministry NOC, a PSQCA standard from Appendix-N, a DRAP clearance, a CITES permit, a pre-shipment inspection by an Appendix-H company, a remaining-life certificate, and so on). Health-and-safety Part-I conditions are typical. The AD's job is to read column 4 of the live row, not to guess.
• Appendix-C (IPO para 5(3)): used / second-hand. Banned in used or second-hand condition except where the Order itself exempts a heading (for example certain used boilers with Chief Inspector of Boilers approval and a prescribed PSI remaining-life certificate). A “refurbished” invoice does not convert an Appendix-C item into new goods.

IPO para 6(2) also applies national quality standards to imports as to domestically produced like goods. IPO para 21 lets the Federal Government, for reasons recorded, allow import in relaxation of a prohibition or restriction, on consecutively numbered, duly embossed letterhead. That relaxation is a document, not a phone call.

Chapter 13 then ties FE to IPO:

• Para 4: misclassification is both an IPO offence and an FE infringement if the AD opened the LC or remitted.
• Para 9: do not open or extend an LC, or register a contract, unless the goods are still allowed; but an LC already issued survives a later IPO tightening.
• Para 15: do not issue an LC, register a contract, or otherwise facilitate imports that the IPO forbids, or that involve a country, exporter, or product under UN sanctions.
• Para 22: an AD may remit the value of an import made in contravention of the IPO only if (i) the Federal Government has condoned the contravention and (ii) Customs have released the goods. Appendix-A commercial-quantity goods never reach (ii).
• Para 28: do not remit against categories exempted from the IPO (examples given: transit, diplomatic officials, imports in bond, gift parcels up to the exempted limit, private personal-use imports up to prescribed limits). Exemption from the IPO is not a licence to sell FX.

PSW FI timing, open account, and cash-margin exceptions

PSW replaced consignment-wise EIF/EFE with electronic trader profiles and Financial Instruments exchanged by EDI (PSW “Elimination of EIF and EFE”; Chapter 13 para 6B). The importer must hold a valid trader profile with an AD before filing a PSW declaration. The AD validates IBAN, contact details, NTN, and modes of payment allowed. Those allowed modes are what PSW will let the importer pick.

FI issuance triggers (para 6B(viii)):

1. Making advance payment; or
2. Establishing a letter of credit; or
3. Receiving shipping documents from the bank abroad, or issuing a shipping guarantee, under registered contract/collection.

Then the special cases the exam pairs with Section 8.1:

• Open account, no cash margin: no FI required before GD. The AD issues/shares the FI upon receipt of the declaration from PSW, and pays only after Customs clearance, within one year, for not more than declared GD value.
• Open account, cash margin specified on the live circular: importer pre-informs the AD; AD recovers margin; AD then communicates the FI; importer attaches GD to that FI.
• One Customs: FI issued on request for all modes; Customs associates it with the GD at out-of-charge.
• Bank-to-bank transfer: only after the FI has been associated with at least one GD (PSW help text: you can only transfer after association with a GD). The receiving AD then owns BDA and settlement.
• EPD Circular Letter No. 09 of 23 April 2026: for crude oil and petroleum products, ADs may issue the FI at registration of the import contract, rather than waiting for shipping documents — a commodity-specific overlay on trigger (3) above.

FI numbers look like ABC-IMP-000001-15032021 plus up to three extra characters for type (LC, contract, advance). Serials reset to 000001 each calendar year. Expiry must commensurate with the LC, contract, or 120/730-day advance clock. ADs may amend value, quantity, price, or validity on documents; they may cancel before BDA (advance) or before declaration attachment.

Settlement (para 6B(xii)): after BDA, shipping documents, and Customs clearance, the AD settles and messages PSW. Open-account payment must not exceed declared GD value. LC/contract/collection value must commensurate with GD. Mismatches need importer clarification; unsatisfactory answers go to FEOD. Unable to settle? Refer FEOD. ITRS reporting uses the FI number.

AD CDD, related parties, and price checks — hooks into Chapter 4, not a rewrite

Chapter 4 of this guide already teaches Incoterms 2020, FATF/SBP TBML typologies (over-, under-, phantom, and double invoicing), the SBP TBML&TF Framework originating in FE Circular 04 of 2019 and revised 12 August 2025, and FMU STR/CTR reporting. Chapter 13 does not repeat that framework. It points to it in four operational places an import desk cannot skip:

• Paras 6A(iii) / 6B(iv): KYC/CDD of importers as customers; managers, proprietors, partners, and directors are jointly and severally responsible for the import. Each client needs a trade risk rating using cross-border activity, performance history, and historic STR reporting.
• Para 6B(vii): ADs share their negative list of countries, commodities, and suppliers with PSW. A match generates an exception request; the importer may still file the declaration, but goods clear only after the AD approves. The AD must respond within one working day of PSW's message, subject to receiving customer information.
• Para 6B(xiv) and para 17: pre- and post-monitoring of all import customers under the TBML framework; open-account WeBOC approvals require CDD before EIF, and PSW open account uses post-clearance due diligence plus GD-value caps.
• Para 8(ii) and para 30(ii): third-country beneficiaries and 100 percent advances both require TBML due diligence, including price trends. Related-party suppliers are the textbook setting for over-invoicing: the AD should identify the relationship, compare unit prices with independent market data, and escalate rather than “because they are the same group.” Phantom shipping (invoice, no goods) and short shipment against advances are why GD matching and repatriation exist.

Enhanced due diligence also applies to remittance-not-involved FIs (loans/equity paid offshore, principal-to-branch supplies, O&M contractor goods, re-imports after repair, temporary admission). The AD must not approve those as a netting tool against export proceeds that should have been repatriated.

A closing desk picture

A Sialkot surgical-instruments importer presents a related-party German invoice, open-account terms, and a used autoclave sitting on Appendix-C. The AD's sequence is: IPO appendix (used autoclave is not a casual OA spare part); origin and UN screen; customer-profile OA permission; live cash-margin circular; related-party price check under the 2025 TBML framework; then, only if the heading is actually importable and OA is delegated, PSW declaration without an FI (unless margin applies). That is Chapter 13 due diligence. It is not a second copy of Chapter 4, and it is not a homemade 2026 banned-goods poster.